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American Union, stay away from me uh.

The percentage of American workers belonging to a union peaked in 1954 at almost 35%, almost all of them in the private-sector.[1] Today, only about 7% of private-sector workers belong to a union. How this came to be is a complex story.

On the one hand, private-sector union membership soon began a steady decline that continues into the 2010s. The 1970s marked an important watershed. First, beginning in the 1970s foreign competitors exerted steady pressure on American producers. Japanese and German cars, steel, and electronics, and Asian textiles all penetrated the American market to an unprecedented degree. Second, companies were racked by strikes that disrupted production and forced up wages: there were 381 major strikes in 1970 and 187 major strikes in 1980. These hard-pressed companies responded by cutting costs, including the high labor costs of unions.

Beginning in the 1980s, companies moved production from pro-union Northeastern and Mid-Western states to anti-union Southern states; or they began the process of off-shoring their production in low-wage Asian countries. High-wage unionized labor got left behind as the non-union jobs created elsewhere paid lower wages. In a sense, unions priced themselves out of jobs.

Then foreign competition combined with new technology to just eliminate many other jobs in previously unionized industries. Between 1974 and 1999 employment in the American steel industry fell from 521,000 people to 153,000 people.[2] The experience of the United Auto Workers has been even more disastrous than that of the United Steel Workers. Many jobs were lost to foreign competition. When foreign companies did build auto plants in the United States, they located them in Southern states. Union membership fell from a peak of 1.5 million in 1979 to 540,000 in 2006 to 390,000 in 2010. Overall, private-sector employers got what they wanted: a lower-cost, more flexible, less disruptive work force.[3] Employers in other industries have worked hard to keep out unions to avoid the fate of cars and steel.

Another key factor is the corporate mismanagement shown by the massive bureaucracies of the car companies and their incompetent response to the “oil shocks” of the 1970s.

However, American businesses have created a lot of good jobs in the high-tech industries at the same time that jobs were disappearing from the low-tech sector. Unions have failed to unionize these sectors. The reasons for this failure are complex. In essence, most of the workers have non-traditional concerns or are educated people who don’t want yet another boss.

In contrast, public sector union membership grew steadily. Today, 31% of federal workers, 35% of state workers and 46% of local workers belong to unions. Moreover, the numbers of people employed by state and local government rose from 4 million workers in 1950 to 16.6 million in 2009. In 2009 there were more people in public sector unions (7.9 million) than in private sector unions (7.4 million). Even the good news is bad news. To prevent the disruption of basic services, governments granted good pay and promised generous pensions. They didn’t ask if future generations would be able to support their promises. It isn’t clear that those pension promises can actually be made good.[4] Another disaster looms for unions.

[1] The absolute number belonging to a union peaked in 1979 at an estimated 21.0 million.

[2] However, what is true in America is true in every other steel-producing nation. Over the last quarter of the 20th century, the world steel industry cut its work force by more than 1.5 million people. Some countries were hit harder even than the United States: Japan was down from 459,000 to 208,000; Germany was down from 232,000 to 78,000; Britain was down from 197,000 to 31,000; Brazil was down from 118,000 to 59,000.

[3] There were only 11 major strikes in 2010. That is a 97% drop from the 1970 peak.

[4] See the many articles by Mary Williams Walsh in the NYT over the past decade.